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You are here: ABSTUDY > 6
Income and Rates > 6.10 Fringe Benefits
Following changes to Taxation legislation, from 1 July 2000, employers are required to report Fringe Benefits amounts on group certificates. As ABSTUDY is aligned to YA for students under 21 and Newstart for students 21 years and over, refer to Social Security law and the Social Security Guide for details of Fringe Benefits. For assessment follow the same procedure as YA
Fringe benefits include the value of any employer provided benefit received during the base tax year. An employer provided benefit is any right, privilege, service, in kind payment or facility that an employee receives (or assigns to someone else) from their employment.
Employees may ‘sacrifice’ an amount of their cash salary and receive the value of the amount as a fringe benefit. In other cases, a fringe benefit may be a fixed part of the employee’s salary package.
Common forms of salary sacrifice or fringe benefits include:
As the value of the benefit is not recorded as salary for the employee, they do not pay income tax on that amount. Instead, the employer pays fringe benefits tax (FBT) on the value of the benefit.
The amount to be declared is the ‘Reportable Fringe Benefits Total’ as reported on the employee’s group certificate. The reportable fringe benefit is used for the purposes of the ABSTUDY parental income test.
Fringe benefits apply to both aspects of current income, so that increases of 25% or more in income, including fringe benefits, and substantial decreases in income, may warrant reassessment based on current income.
The Australian equivalent of the value of fringe benefits provided overseas is taken into account for income testing purposes. If a student’s partner or parents are working overseas and receiving any of those fringe benefits, the Australian equivalent of the value of the benefits is to be included.
Harry is a full-time student who is eligible for ABSTUDY. His parents are Australian residents who live and work in New Zealand. Their employer provides them with a company car for their private use. The Australian equivalent of the value of the car fringe benefit is to be included under the income testing arrangements.
The overseas value of the fringe benefit is converted to an Australian value by dividing the value of the benefit in the overseas currency by the appropriate exchange rate. For example, the value of the car benefit (see above) is converted to an Australian value by dividing the New Zealand value by the applicable exchange rate.
Ministers of religion are treated the same as way any other employee for the purposes of assessing adjusted fringe benefits.
The assessment of adjusted fringe benefits for ministers of religion is also based on the grossed fringe benefit recorded on their group certificate. Certain benefits received by ministers of religion are exempt under Section 57 of the Fringe Benefits Tax Assessment Act. These benefits will not appear on their group certificate, and therefore will not be assessed as adjusted fringe benefits.
The employer is responsible for reporting fringe benefits on an employee’s group certificate. The amount that is reported on the group certificate is the grossed-up value of the fringe benefit and is referred to as the ‘reportable fringe benefit total’.
The FBT rate is the fringe benefits tax rate set by the Fringe Benefits Tax Act 1986. It is the highest marginal tax rate including the Medicare levy. There is an updated FBT rate each year and it is expressed as a percentage of 1.
A fringe benefits tax year runs from 1 April to 31 March. Where customers elect to give an employer statement of the value of their fringe benefits, the relevant fringe benefits tax year is the one completed in the relevant year of income. So, for example, for a 2002 ABSTUDY assessment, the relevant year of income will ordinarily be 2000/01. The relevant fringe benefits year will be the one that ended on 31 March 2001. The exception to this is current income based assessments. (see - 6.3)
The first $1,000 of reportable fringe benefits is exempt from the parental and partner income test. Reportable fringe benefits in excess of $1,000 appear on an employee’s Group Certificate. The reportable fringe benefits will be reduced by the maximum tax rate and the adjusted fringe benefits will be added to the parental income.
In respect of the reportable fringe benefits, the assessable value of such is normally measured against the fringe benefit tax accounting period (1 April to 31 March) ending prior to the year for which assistance is sought. This may vary if current income assessment (see - 6.3.1) applies. The reportable fringe benefits total is found on the group certificate provided by the employer.
The types of fringe benefits include the following but are not limited to:
Reporting fringe benefits is the responsibility of the employer. If further information is required in regard to fringe benefits, the employee should seek advice from the employer or the Australian Taxation Office.
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